Friday, August 20, 2010

We know the market was once a market now its the market on QE...

Slow motion destruction...

Wednesday, August 18, 2010

GM IPO - the ultimate manipulation (almost)

Well there you have it. GM filed the IPO. Just in time for elections. Mr. Obama tried very hard...and though he has absolutely NO understanding of what he is doing or dealing with he will try to milk this for all its worth.

I would like to point out that liquidity is not abundant, and given that backdrop, the nice thing about the IPO is that GM will technically retire its debts including the ones to uncle sam. Would you buy into this scam? Would anyone with a brain buy shares of GM on this IPO? Is GM a good risk? Has management done anything to instill confidence aside from demonstrating that management is NOT committed to its plan or execution of it? One would, in my opinion have to be slightly delusional to want to buy into this IPO...possibly buyers of the KKR IPO might like this one...but those guys don't have much money left.

So, where are they going to raise this kind of money under the pretense of paying back the taxpayer? 

I see only one answer that makes sense or seems plausible, off balance sheet investment firms financed with undisclosed money supplied by the Fed and therefore, ultimately the taxpayer. Bernake might aswell crack open that Maiden Lane holdings vehicle again. The only marginally positive thing about this is that the crew will try like hell to keep the markets from tanking until the last possible moment. The irony is that this whole operation is simply another expression of the same ponzi scheme designed to make it look like there is more money in the system than there actually is.

Way to go Bernake, Geithner, Summers, Obama, Dimon and Wall Street - pay off the tax payer with money from the tax payer and a few other fools you can pick up along the way. However, real payback will not be fun and this effort is fraudulent manipulation designed to influence the elections - so, good luck Washington are going to need it...the best outcome will be that the deal gets cancelled due to a weak market and that the threat of a liquidity vacuum in the equity markets created by this IPO disrupts the manipulation effort.

Finally, the new release is out

After three months of very hard, frustrating and challenging effort, the new release of m3RVS is deployed. This release includes significant enhancements, a centralized trade controller, slippage reversal engine, risk manager and allocation pool capability. The improvements are dramatic for most of the systems and those results were already very strong.

I appreciate the patience and support of everyone who has been listening to me bicker about this release...but has been worth the effort, most definitely worth it in my book.

Below is an updated view of the new capabilities applied to the ES Swing strategy from inception. Average risk capital in trade, $34,000. For reference you can see the previous results here: RVS System Reference Performance Data for major index futures

Below is an updated view of the new capabilities applied to the ES Income strategy from inception. Average risk capital in trade, $20,000.
For both of these systems, they factor 1.5 points of slippage on the ES and $5 in and $5 out for trading expenses. There is no compounding (reinvestment of profits). In real trading, slippage reversal functions generally generate positive slippage for the systems in the market and trading fees are more like $1.5 to $2 per contract. 

3 Seconds...

we made this little movie in a weekend...

Tuesday, August 17, 2010


Goldman made a lowball bid of just 0.75 percent of proceeds, supposedly to win the IPO business. The reaction was that Treasury declined the Goldman lowball offer, and forced the lowball fee on four big Wall Street banks that are set to lead the offering. Those banks could have made up to three or four times the $120 million they will split on the deal.

IPOs of this size usually cost close to 3 percent even up to a full 6 percent. Other bids were said to be generally in the 2 to 2.5 percent range while Reuters notes that a 0.75 percent underwriting fee is among the smallest in percentage-terms, of the top 10 IPOs of all time.

Goldman Tax strikes again and they are not even in the deal!

Sunday, August 15, 2010

Hindenburg Omen is now a part of the media agenda...

Hindenburg Omen' Flashes Technical Gauge and Its Creator Sense Stock Gloom; 'Good Conspiracy Theories'?


Forget about Friday the 13th. Many on Wall Street took to whispering about an even scarier phenomenon—the "Hindenburg Omen."

The Omen, named after the famous German airship in 1937 that crashed in Lakehurst, N.J., is a technical indicator that foreshadows not just a bear market but a stock-market crash. Its creator, a blind mathematician named Jim Miekka, said his indicator is now predicting a market meltdown in September.

Wall Street has been abuzz about whether the Hindenburg Omen will come to bear, with some traders cautioning clients about the indicator and blogs pondering all the doom and gloom. - Wall Street Journal
I find it truly saddening that the media will salaciously report news with hype, derision and misinformation. While there was a Hindenburg Omen this week, we did not need one to know that there has been a huge amount of conflict building in the markets. The trading over the last months has been enough to satisfy that deduction.  However, that's all this particular Hindenburg Omen tells us. "There is internal dissension in the markets." For Hindenburg Omens to matter there have to two or three of them in a reasonable period of time. The average trough low after a Hindenburg Omen is 8%. That is not a crash that's one day volatility in our current markets.

While I obviously think the asset markets are extremely overvalued and would expect large moves to the downside, the Wall Street Journal could have used this opportunity to educate people and rather simultaneously use it to scare people and berate doom and gloom views as hype. So, which one is it Mr. Wall Street Journal? Well, I guess its neither because its just about selling advertising while trying to espouse conservatism and sooth long-term investors by berating nay sayers . But this is another example of irresponsible reporting.

While I wrote  a program that alerts me to these Hindenburg Omen's, they are meaningless unless they occur in groups. Additionally, there have been quite a few isolated HO's that have resulted in immediate reversals. It would have been nice for the WSJ to educate and report without an agenda but sadly this is just another example of our conflicted and irresponsible media empires.

Bill Black "Rating agencies and Stupid Strategies"

© 2009 m3, ltd. All rights reserved.